Clean Industrial Deal, Action Plan for Affordable Energy and Omnibus packages I and II

QuickTake

On February 26, the European Commission (EU Commission) presented various measures to strengthen the competitiveness of European industry, promote bureaucracy reduction and advance decarbonization. The measures serve to substantiate the communication “A Competitive Compass for the EU”, which the EU Commission had already published on January 29.

The Clean Industrial Deal is essentially a strategy for promoting competitive and climate-neutral industry in Europe. The measures it contains are designed to ensure affordable energy prices on the one hand and to drive decarbonization on the other, in order to secure Europe’s future as an industrial center.

The Clean Industrial Deal defines six key areas for action for the European economy. The top priority is affordable energy, for which the European Commission adopted the Action Plan for Affordable Energy on the same day. Other priorities include the development of lead markets, the financing of climate protection measures and the expansion of the European circular economy. In addition, the European Commission is focusing on international partnerships and the development of a skilled workforce in order to successfully shape the industrial transformation.

The so-called Omnibus Package I essentially contains concrete proposals to simplify the reporting requirements under the Corporate Sustainability Reporting Directive (CSRD) and the Taxonomy Regulation, as well as the due diligence requirements under the Supply Chain Due Diligence Directive (CSDDD). The Carbon Border Adjustment Mechanism (CBAM) is also to be simplified and the administrative burden associated with it reduced.

The aim of the so-called Omnibus Package II is to simplify the EU investment instruments that the Commission has presented with the revision of the Invest EU Regulation and three old programs.

Key takeaways of the Plan for Affordable Energy

The Clean Industrial Deal particularly targets energy-intensive companies that have to both meet their decarbonization obligations and deal with global competition and complex regulatory requirements.

According to the European Commission, structural inefficiencies in the electricity system contribute sig-nificantly to the high energy costs for European industry. In particular, the inadequate interconnected grid and grid infrastructure need to be further expanded to create a fully integrated internal energy market.

The Action Plan for Affordable Energy therefore proposes measures to reduce energy costs. These include, in particular, the increased use of (cross-border) power purchase agreements (PPAs) and con-tracts for difference (CfDs). The EU Commission and the European Investment Bank (EIB) are planning a pilot program worth 500 million euros to promote the conclusion of such contracts. This is intended in particular to support small and medium-sized enterprises (SMEs) and energy-intensive industries by providing guarantees for PPAs.

In addition, the EIB is to set up a grid expansion package worth at least €1.5 billion. Counter-guarantees for the production of grid components should boost the manufacture of the required components and accelerate the expansion of the grid as a whole.

In order to further promote the expansion of renewable energies and support industrial decarbonization, the rules for state aid are to be simplified by June 2025. In addition, the EU Commission plans to publish guidelines on the design of contracts for difference to ensure a legally certain and targeted implementation.

At the same time, the Commission expects industry to better align energy consumption with the availability of low-cost renewable energy. The use of technologies for flexible control of energy consumption should be encouraged. To this end, the Commission will publish guidelines for Member States and retailers on the remuneration of flexibility in retail contracts in the fourth quarter of 2025.

In addition, the Commission is proposing a reduction in electricity tax. A corresponding recommendation for an actual reduction in the level of taxation in the EU will be presented in the near future.

Finally, the Commission plans to introduce new legislation for harmonized grid fee structures. A European grid package should accelerate cross-border planning and the expansion of interconnectors.

Key takeaways of the Clean Industrial Deal

1.   Creation of lead markets for the clean tech sector

In addition to industry, the clean tech sector is also coming into focus of the Clean Industrial Deal, although the term is not defined in more detail. The EU Commission assumes that companies with sufficient planning security will increasingly focus on low-carbon products. A central component of the deal is therefore the promotion of sustainable products “Made in Europe”.

To achieve this, sustainability and resilience criteria are to be integrated into public procurement. A proposal for a revision of European public procurement law is planned for 2026. In addition, criteria for resilience and sustainability are to be introduced as part of the law to accelerate industrial decarbonization in order to ensure a stable and climate-friendly supply for energy-intensive sectors.

Another key element is the introduction of voluntary CO₂ labeling for industrial products. This should be based on existing ETS data and the CBAM methodology to enable a transparent assessment of the climate impact of products.

Regarding green hydrogen, the Commission plans to adopt a delegated act on low-carbon hydrogen in the first quarter of 2025 to clarify the rules for its production and to accelerate the slow ramp-up of the hydrogen economy.

In addition, a revision of the Emissions Trading Directive (EU-ETS 2) is planned for 2026. The latest changes have already been implemented in Germany by an amendment to the Greenhouse Gas Emissions Trading Act Amendment Act.

2.   Financing at EU-Level

To finance the measures, the Commission proposes an amendment to the InvestEU Regulation. In addition, the revision of the General Block Exemption Regulation should reduce the administrative burden of state aid procedures and enable faster state aid. The communication on state guarantees will also be reviewed and adapted to the new framework.

To strengthen the innovative capacity of European companies, the Commission wants to accelerate the development of new Important Projects of Common European Interest (IPCEI) and improve their efficiency. At the same time, antitrust rules are to be adapted to facilitate cross-border cooperation projects in line with EU priorities.

Another proposal concerns tax incentives for climate-friendly business models. Member States should be able to adapt their corporate tax systems in such a way as to specifically favor investments in sustainable technologies.

In the area of foreign investment, the Commission intends to publish guidelines on the Foreign State Resources (FSR) Regulation by January 2026. These guidelines should in particular clarify in which cases the Commission can also review mergers below the previous thresholds.

3.   Energy and circular economy

Securing access to critical raw materials is essential to achieving climate targets. The EU is therefore planning to establish a center for critical raw materials to enable joint procurement and to pool demand. At the same time, supply chains are to be diversified and the Carbon Border Adjustment Mechanism (CBAM) is to be further developed and simplified.

New circular economy legislation is also planned for 2026. The law should facilitate the free movement of secondary raw materials and circular products, promote a greater supply of high-quality recyclates and increase demand for recycled materials. The aim is to reduce the cost of raw materials and make the European economy less dependent on imports.
In addition, the EU VAT Directive is to be revised to reduce tax barriers for second-hand goods and secondary raw materials.

To strengthen global competitiveness, the Commission is focusing on new partnerships for clean trade and investment. The so-called Clean Trade and Investment Partnerships (CTIPs) are intended to enable closer alignment of EU foreign policy with the EU’s industrial policy objectives and to secure the Europe-an position in global value chains.

At the same time, measures are being taken to protect European companies from unfair competition. The Commission plans to further develop the CBAM mechanism to simplify reporting requirements for companies. It is estimated that 90% of importers will be exempt from reporting requirements in the future, while over 99% of emissions will continue to be covered by the system.

In the second half of 2025, the Commission will present a comprehensive CBAM review report and reserves the right to use trade defense instruments such as punitive tariffs if necessary.

The main proposed amendments of Omnibus Package I

The CSRD requires EU member states to introduce sustainability reporting for companies. In Germany, it has not yet been transposed into national law, although it should have been transposed by July 6, 2024. The planned changes initially concern a postponement of the first-time application date for reporting companies by two years. Companies that would have fallen under the scope of application for the first time for the 2025 financial year under the current CSRD will now have to report for the first time on the 2027 financial year. In addition, the scope of application is to be adjusted, in particular one of the thresholds: in the future, only large companies with at least 1,000 employees will be required to report (previously 250). Of the other size criteria, either the EUR 50 million turnover threshold or the EUR 25 million balance sheet total threshold must be exceeded, as before. This should reduce the number of companies falling within the scope of the directive by around 80%. In addition, the European Commission wants to revise the European Sustainability Reporting Standards (ESRS).

The package also includes changes to the CSRD with regard to taxonomy reporting, in derogation of Article 8 of the Taxonomy Regulation, and the Commission’s proposals for draft amendments to the delegated taxonomy act on disclosure requirements and the delegated acts on climate taxonomy and environmental taxonomy. For companies falling under the future scope of the CSRD (large companies with more than 1,000 employees) and with a net turnover of up to €450 million, the Omnibus proposal provides for voluntary taxonomy reporting. This would reduce the number of companies required to report on their taxonomy alignment.

The CSDDD is intended to require companies to identify, prevent and remediate adverse human rights and environmental impacts in themselves, their subsidiaries and their chains of activity. In many respects, the CSDDD goes further than the German Supply Chain Due Diligence Act (LkSG). As things stand, the member states must transpose the CSDDD into national law by July 2026. The new rules will then apply one to three years later, depending on the size of the company (starting in July 2027 for companies with more than 5,000 employees and a turnover of EUR 1.5 billion). According to the new plans, the implementation period for the member states will not end until July 2027; the first group of obligated companies will not begin to fulfill their obligations until July 2028. Another planned change is to limit due diligence to a company’s own business activities, those of its subsidiaries and direct business partners in the value chain. In the future, indirect business partners will only be included in the due diligence obligations if plausible information about potential or actual negative impacts is available. It should also be emphasized that under the new plans, companies will only have to review the appropriateness and effectiveness of their due diligence measures every five years instead of every year, as is currently the case under the CSDDD. Finally, the legal consequences of violations are to be mitigated. The upper limit of the fine of at least 5% of annual turnover is to be removed and replaced by a requirement for the Commission, in cooperation with the Member States, to produce guidelines to help the supervisory authorities determine the amount of the fines.

In May 2023, Regulation (EU) 2023/956 establishing a carbon border adjustment mechanism (CBAM Regulation) came into force, which did not require national implementation. The CBAM imposes a price on greenhouse gas emissions from the production of certain goods in third countries. This applies to cement, iron and steel, aluminum, electricity, fertilizers and hydrogen. After a transitional phase until the end of 2025, the system should now take full effect from 2026. A key component of Omnibus Package I is the introduction of a threshold of 50 tons per year for goods subject to CBAM. So far, the value limit has been set at €150. In addition to the new threshold, a number of simplifications are planned for calculation and reporting. Another major point concerns the start date for the sale of CBAM certificates. While the current regulation plans to start this as early as 2026, the Commission is proposing a postponement to February 2027 in the Omnibus proposal. It should be emphasized that the changes only relate to the CBAM regulation itself and thus, in principle, only to the application phase of the CBAM system. No simplifications are planned for the transition phase, which will continue until the end of this year.

The key contents of the Omnibus II package

The aim of the so-called Omnibus Package II is to simplify the EU investment instruments that the Commission has presented with the revision of the Invest EU Regulation and three old programs. Small and medium-sized enterprises (SMEs) that receive investment support from InvestEU should have fewer reporting requirements. The Commission also plans to reuse funds returned from previous investments. It estimates that around €2.5 billion can be used as guarantees to leverage up to €25 billion in investments. In addition, it aims to mobilize a further €25 billion by combining InvestEU funds with other funding. The increased InvestEU capacity will be used primarily to support priority policies, such as the Clean Industrial Deal and potential new initiatives in defense industrial policy. 

Outlook ahead

With the Clean Industrial Deal, the European Commission is responding to the economic challenges facing industry and pursuing the goal of securing prosperity and competitiveness in the long term. The deal provides strong incentives for European companies to invest in zero-emission energy sources, sustainable technologies and the necessary infrastructure. The European Commission’s announcements, which from a legal point of view are probably best classified as declarations of intent, must now be followed by concrete proposals for implementation at the legislative level. 

The Omnibus proposals still have to be submitted to the European Parliament and the Council for consideration and adoption. The Commission has requested that the proposals be given priority. However, it is uncertain how quickly an agreement on the content can be reached. A swift agreement process would be welcome, not least in the interests of legal certainty and clarity. 

Overall, affected companies should carefully monitor developments in order to be able to adapt to the applicable legal situation in a targeted manner. We will keep you informed of further developments. Please do not hesitate to contact us if you have any questions.

About us

PwC Legal’s EMEA Energy & Infrastructure Group supports clients in navigating the evolving legal and regulatory landscape of the energy and infrastructure sectors. Our multi-disciplinary and multijurisdictional team of sector specialists advises on legal challenges and strategic opportunities arising from the energy transition, infrastructure modernization, and regulatory developments across the EMEA region.

We assist clients in proactively engaging with policymakers, regulators, and market stakeholders to shape regulatory frameworks and adapt their business models to new sustainability, digitalization, and investment trends. Our expertise spans project development, regulatory compliance, transactions, and dispute resolution in key areas such as renewables, hydrogen, energy storage, grid infrastructure, and sustainable transport

With deep sector knowledge and a future-focused approach, our EMEA Energy & Infrastructure Group is committed to helping clients drive innovation and resilience in an increasingly complex energy and infrastructure landscape.

If you would like to discuss any of the developments mentioned above, or how they may affect your business more generally, please contact us.

This article was written by Julia Scheibler and Theresa Stollmann.